AMENDED AND RESTATED
TERMINATION BENEFITS AGREEMENT
As of July 29, 1994, INDIANA ENERGY, INC., an Indiana
corporation having its principal executive offices at 0000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000 ("ENERGY"), INDIANA
GAS COMPANY, INC., an Indiana corporation having its principal
executive offices at 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxx 00000 ("INDIANA GAS"), and Xxxxxxx X. Xxxxxx, an Indiana
resident whose mailing address is 1992 Inverness, Xxxxxxxxx,
Xxxxxxx 00000 (the "Executive") entered into a Termination
Benefits Agreement (the "Agreement"). Pursuant to Section 4(f)
of the Agreement and effective as of October 1, 1997, ENERGY and
Executive amend and completely restate the Agreement to provide,
in its entirety, as follows:
R E C I T A L S
The following facts are true:
A. The Officer is serving ENERGY as a key officer or
serving as a key officer of a direct or indirect subsidiary of
ENERGY ("Affiliate") (ENERGY and each Affiliate are collectively
referred to as the "Company"), and is expected to continue to
make a major contribution to the profitability, growth, and
financial strength of the Company.
B. The Company considers the continued services of the
Officer to be in the best interests of the Company and its
shareholders, and desires to assure itself of the availability of
such continued services in the future on an objective and
impartial basis and without distraction or conflict of interest
in the event of an attempt to obtain control of the Company.
C. The Officer is willing to remain in the employ of the
Company upon the understanding that the Company will provide him
with income security upon the terms and subject to the conditions
contained herein if his employment is terminated by the Company
without cause or if he voluntarily terminates his employment for
good reason.
A G R E E M E N T
In consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the Company and the Officer
agree as follows:
1. Undertaking. The Company agrees to pay to the Officer
the termination benefits specified in paragraph 2 hereof if (a)
control of ENERGY is acquired (as defined in paragraph 3(a)
hereof) during the term of this Agreement (as described in
paragraph 5 hereof) and (b) within three (3) years after the
acquisition of control occurs (i) the Company terminates the
employment of the Officer for any reason other than Cause (as
defined in paragraph 3(b) hereof), death, the Officer's
attainment of age sixty-five (65) or total and permanent
disability, or (ii) the Officer voluntarily terminates his
employment for Good Reason (as defined in paragraph 3(c) hereof)
or without reason during the Window Period (as defined in
paragraph 3(d) hereof).
2. Termination Benefits. If the Officer is entitled to
termination benefits pursuant to paragraph 1 hereof, the Company
agrees to pay to the Officer as termination benefits in a
lump-sum payment within five (5) calendar days of the termination
of the Officer's employment an amount equal to the Officer's
annual compensation (as determined consistent with the provisions
of Section 280G(d)(1) of the Internal Revenue Code of 1986, as
amended (the "Code")) payable by the Company and by any other
entity affiliated with the Company within the meaning of Section
414(b) of the Code which was includable in the gross income of
the Officer for the most recent calendar year ending coincident
with or immediately before the date on which control of ENERGY is
acquired; provided, however, that subject to the limitations set
forth in paragraph 4(d), the Officer's annual compensation for
the most recent calendar year ending coincident with or
immediately before the date on which the control of ENERGY is
acquired shall include any elective deferrals made by the Officer
during such calendar year under the Indiana Energy, Inc.
Executive Compensation Deferral Plan (the "Deferral Plan") and
shall exclude any distribution to the Officer under the Deferral
Plan during such calendar year. For the purposes of this
Agreement, employment and compensation paid by any direct or
indirect subsidiary of the Company will be deemed to be
employment and compensation paid by the Company.
3. Definitions.
(a) As used in this Agreement, the "acquisition of
control" means:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty percent
(20%) or more of either (A) the then outstanding shares
of common stock of ENERGY (the "Outstanding ENERGY
Common Stock") or (B) the combined voting power of the
then outstanding voting securities of ENERGY entitled
to vote generally in the election of directors (the
"Outstanding ENERGY Voting Securities"); provided,
however, that the following acquisitions shall not
constitute an acquisition of control: (A) any
acquisition directly from ENERGY (excluding an
acquisition by virtue of the exercise of a conversion
privilege), (B) any acquisition by ENERGY, (C) any
acquisition by any employee benefit plan (or related
trust) sponsored or maintained by ENERGY or any
corporation controlled by ENERGY or (D) any acquisition
by any corporation pursuant to a reorganization, merger
or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in
clauses (A), (B) and (C) of subsection (iii) of this
paragraph 3(a) are satisfied;
(ii) Individuals who, as of July 25, 1997,
constitute the Board of Directors of ENERGY (the
"Incumbent Board") cease for any reason to constitute
at least a majority of the Board of Directors of ENERGY
(the "Board"); provided, however, that any individual
becoming a director subsequent to the date hereof whose
election, or nomination for election by ENERGY's
shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial
assumption of office occurs as a result of either an
actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(iii) Approval by the shareholders of ENERGY
of a reorganization, merger or consolidation, in each
case, unless, following such reorganization, merger or
consolidation, (A) more than sixty percent (60%) of,
respectively, the then outstanding shares of common
stock of the corporation resulting from such
reorganization, merger or consolidation and the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote
generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who
were the beneficial owners, respectively, of the
Outstanding ENERGY Common Stock and Outstanding ENERGY
Voting Securities immediately prior to such
reorganization, merger or consolidation in
substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation, of the Outstanding ENERGY Stock and
Outstanding ENERGY Voting Securities, as the case may
be, (B) no Person (excluding ENERGY, any employee
benefit plan or related trust of ENERGY, INDIANA GAS or
such corporation resulting from such reorganization,
merger or consolidation and any Person beneficially
owning, immediately prior to such reorganization,
merger or consolidation and any Person beneficially
owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, twenty
percent (20%) or more of the Outstanding ENERGY Common
Stock or Outstanding Voting Securities, as the case may
be) beneficially owns, directly or indirectly, twenty
percent (20%) or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or
consolidation or the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of directors
and (C) at least a majority of the members of the board
of directors of the corporation resulting from such
reorganization, merger or consolidation were members of
the Incumbent Board at the time of the execution of the
initial agreement providing for such reorganization,
merger or consolidation;
(iv) Approval by the shareholders of ENERGY of (A)
a complete liquidation or dissolution of ENERGY or (B)
the sale or other disposition of all or substantially
all of the assets of ENERGY, other than to a
corporation, with respect to which following such sale
or other disposition (1) more than sixty percent (60%)
of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power
of the then outstanding voting securities of such
corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the
individuals and entities who were the beneficial
owners, respectively, of the Outstanding ENERGY Common
Stock and Outstanding ENERGY Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of
the Outstanding ENERGY Common Stock and Outstanding
ENERGY Voting Securities, as the case may be, (2) no
Person (excluding ENERGY and any employee benefit plan
or related trust of ENERGY, INDIANA GAS or such
corporation and any Person beneficially owning,
immediately prior to such sale or other disposition,
directly or indirectly, twenty percent (20%) or more of
the Outstanding ENERGY Common Stock or Outstanding
ENERGY Voting Securities, as the case may be)
beneficially owns, directly or indirectly, twenty
percent (20%) or more of, respectively, the then
outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote
generally in the election of directors and (3) at least
a majority of the members of the board of directors of
such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement or
action of the Board providing for such sale or other
disposition of assets of ENERGY; or
(v) The closing, as defined in the documents
relating to, or as evidenced by a certificate of any
state or federal governmental authority in connection
with, a transaction approval of which by the
shareholders of ENERGY would constitute an "acquisition
of control" under subsection (iii) or (iv) of this
section 3(a) of this Agreement.
Notwithstanding anything contained in this Agreement to
the contrary, if the Officer's employment is terminated
before an "acquisition of control" as defined in this
section 3(a) and the Officer reasonably demonstrates that
such termination (i) was at the request of a third party who
has indicated an intention or taken steps reasonably
calculated to effect an "acquisition of control" and who
effectuates an "acquisition of control" (a "Third Party") or
(ii) otherwise occurred in connection with, or in
anticipation of, an "acquisition of control" which actually
occurs, then for all purposes of this Agreement, the date of
an "acquisition of control" with respect to the Officer
shall mean the date immediately prior to the date of such
termination of the Officer's employment.
(b) As used in this Agreement, the term "Cause" means
fraud, dishonesty, theft of corporate assets, or other gross
misconduct by the Officer. Notwithstanding the foregoing,
the Officer shall not be deemed to have been terminated for
cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of
the Board at a meeting of the Board called and held for the
purpose (after reasonable notice to him and an opportunity
for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board
the Officer was guilty of conduct set forth above in the
first sentence of the subsection and specifying the
particulars thereof in detail.
(c) As used in this Agreement, the term "Good Reason"
means, without the Officer's written consent, (i) a demotion
in the Officer's status, position or responsibilities which,
in his reasonable judgment, does not represent a promotion
from his status, position or responsibilities as in effect
immediately prior to the change in control; (ii) the
assignment to the Officer of any duties or responsibilities
which, in his reasonable judgment, are inconsistent with
such status, position or responsibilities immediately prior
to the change in control; or any removal of the Officer from
or failure to reappoint or reelect him to any of such
positions that the officer had immediately prior to the
change in control, except in connection with the termination
of his employment for total and permanent disability, death
or Cause or by him other than for Good Reason; (iii) a
reduction by the Company in the Officer's base salary as in
effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement or the
Company's failure to increase (within twelve (12) months of
the Officer's last increase in base salary) the Officer's
base salary after a change in control in an amount which at
least equals, on a percentage basis, the average percentage
increase in base salary for all executive and senior
officers of the Company effected in the preceding twelve
(12) months; (iv) the relocation of the principal executive
offices of ENERGY or Affiliate, whichever entity is the
primary employer of the Officer immediately prior to the
change in control, to a location outside the Indianapolis,
Indiana metropolitan area or the Company's requiring him to
be based at any place other than the location at which he
performed his duties immediately prior to a change in
control, except for required travel on the Company's
business to an extent substantially consistent with his
business travel obligations at the time of a change in
control; (v) the failure by the Company to continue in
effect any incentive, bonus or other compensation plan in
which the Officer participates immediately prior to the
change in control, including but not limited to the
Company's stock option and restricted stock plans, if any,
unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan), with which he has
consented, has been made with respect to such plan in
connection with the change in control, or the failure by the
Company to continue his participation therein, or any action
by the Company which would directly or indirectly materially
reduce his participation therein; (vi) the failure by the
Company to continue to provide the Officer with benefits
substantially similar to those enjoyed by him or to which he
was entitled under any of the Company's pension, profit
sharing, life insurance, medical, dental, health and
accident, or disability plans in which he was participating
at the time of a change in control, the taking of any action
by the Company which would directly or indirectly materially
reduce any of such benefits or deprive him of any material
fringe benefit enjoyed by him or to which he was entitled at
the time of the change in control, or the failure by the
Company to provide him with the number of paid vacation and
sick leave days to which he is entitled on the basis of
years of service with the Company in accordance with the
Company's normal vacation policy in effect on the date
hereof; (vii) the failure of the Company to obtain a
satisfactory agreement from any successor or assign of the
Company to assume and agree to perform this Agreement;
(viii) any purported termination of the Officer's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph 4(c) hereof (and,
if applicable, paragraph 3(b) hereof); and for purposes of
this Agreement, no such purported termination shall be
effective; or (ix) any request by the Company that the
Officer participate in an unlawful act or take any action
constituting a breach of the Officer's professional standard
of conduct.
Notwithstanding anything in this paragraph 3(c) to the
contrary, the Officer's right to terminate his employment
pursuant to this paragraph 3(c) shall not be affected by his
incapacity due to physical or mental illness.
(d) As used in this Agreement, the "Window Period"
shall mean the 30-day period immediately following the first
anniversary of the acquisition of control.
4. Additional Provisions.
(a) Enforcement of Agreement. The Company is aware
that upon the occurrence of a change in control the Board of
Directors or a shareholder of the Company may then cause or
attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to
cause the Company to institute, or may institute, litigation
seeking to have this Agreement declared unenforceable, or
may take or attempt to take other action to deny the Officer
the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be
frustrated. It is the intent of the Company that the
Officer not be required to incur the expenses associated
with the enforcement of his rights under this Agreement by
litigation or other legal action, nor be bound to negotiate
any settlement of his rights hereunder, because the cost and
expense of such legal action or settlement would
substantially detract from the benefits intended to be
extended to the Officer hereunder. Accordingly, if
following a change in control it should appear to the
Officer that the Company has failed to comply with any of
its obligations under this Agreement or in the event that
the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any
litigation or other legal action designed to deny, diminish
or to recover from the Officer the benefits entitled to be
provided to the Officer hereunder, and that the Officer has
complied with all of his obligations under this Agreement,
the Company irrevocably authorizes the Officer from time to
time to retain counsel of his choice, at the expense of the
Company as provided in this paragraph 4(a), to represent the
Officer in connection with the initiation or defense of any
litigation or other legal action, whether such action is by
or against the Company or any director, officer,
shareholder, or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such
counsel, the Company irrevocably consents to the Officer
entering into an attorney-client relationship with such
counsel, and in that connection the Company and the Officer
agree that a confidential relationship shall exist between
the Officer and such counsel. The reasonable fees and
expenses of counsel selected from time to time by the
Officer as hereinabove provided shall be paid or reimbursed
to the Officer by the Company on a regular, periodic basis
upon presentation by the Officer of a statement or
statements prepared by such counsel in accordance with its
customary practices, up to a maximum aggregate amount of
$500,000. Any legal expenses incurred by the Company by
reason of any dispute between the parties as to
enforceability of or the terms contained in this Agreement,
notwithstanding the outcome of any such dispute, shall be
the sole responsibility of the Company, and the Company
shall not take any action to seek reimbursement from the
Officer for such expenses.
(b) Severance Pay; No Duty to Mitigate. The amounts
payable to the Officer under this Agreement shall not be
treated as damages but as severance compensation to which
the Officer is entitled by reason of termination of his
employment in the circumstances contemplated by this
Agreement. The Company shall not be entitled to set off
against the amounts payable to the Officer any amounts
earned by the Officer in other employment after termination
of his employment with the Company, or any amounts which
might have been earned by the Officer in other employment
had he sought such other employment.
(c) Notice of Termination. Any purported termination
by the Company or by the Officer for Good Reason or by the
Officer without any reason during the Window Period shall be
communicated by written Notice of Termination to the other
party hereto in accordance with paragraph 4(j) hereof. For
purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of his employment under the
provision so indicated. For purposes of this Agreement, no
such purported termination shall be effective without such
Notice of Termination.
(d) Internal Revenue Code. Notwithstanding anything
in this Agreement to the contrary (other than this
paragraph), in the event that Xxxxxx Xxxxxxxx & Co. (or its
successor) determines that any payment by the Company to or
for the benefit of the Officer pursuant to the terms of this
Agreement would be nondeductible by the Company for federal
income tax purposes because of Section 280G of the Code,
then the amount payable to or for the benefit of the Officer
pursuant to this Agreement shall be reduced (but not below
zero) to the maximum amount payable without causing the
payment to be nondeductible by the Company because of
Section 280G of the Code; provided, however, that
notwithstanding the preceding clause of this sentence, if
Section 280G of the Code is amended after the date on which
this Agreement has been executed and if the amendment has
the effect of reducing the amount of deductible payments
that may be made by the Company to the Executive under
Section 280G of the Code to an amount less than what would
have been deductible by the Company under Section 280G of
the Code as in effect on October 1, 1997, the maximum amount
payable to the Executive under this paragraph 4(d) shall be
determined without regard to any amendment to Section 280G
of the Code; provided, further, that if solely by reason of
any amendment to Section 280G of the Code an excise tax is
imposed on the Executive under Section 4999 of the Code as a
result of payments made under this Agreement, the Company
shall increase the benefit payable to the Executive under
this Agreement by an amount ("Make Whole Payment") which,
after taking into account the additional federal, state and
local income taxes or the amount (including the Code Section
4999 excise tax that would be imposed on the Make Whole
Payment), would reimburse the Executive fully for the Code
Section 4999 tax that is imposed on the other payments made
hereunder and put the Executive in same net after-tax
position with respect to this Agreement that he would have
been but for the excise tax. Such determination by Xxxxxx
Xxxxxxxx & Co. (or its successor) shall be conclusive and
binding upon the parties.
(e) Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective executors, administrators, heirs, personal
representatives, successors, and assigns, but neither this
Agreement nor any right hereunder may be assigned or
transferred by either party hereto, any beneficiary, or any
other person, nor be subject to alienation, anticipation,
sale, pledge, encumbrance, execution, levy, or other legal
process of any kind against the Officer, his beneficiary or
any other person. Notwithstanding the foregoing, the
Company shall assign this Agreement to any corporation or
other business entity succeeding to substantially all of the
business and assets of the Company by merger, consolidation,
sale of assets, or otherwise and shall obtain the assumption
of this Agreement by such successor.
(f) Amendment. This Agreement shall not be amended,
modified, or supplemented without the written agreement of
the parties at the time of such amendment, modification, or
supplement.
(g) Governing Law. This Agreement shall be governed
by and subject to the laws of the State of Indiana.
(h) Severability. The invalidity or unenforceability
of any particular provision of this Agreement shall not
affect the other provisions, and this Agreement shall be
construed in all respects as if such invalid or
unenforceable provision had not been contained herein.
(i) Captions. The captions in this Agreement are for
convenience and identification purposes only, are not an
integral part of this Agreement, and are not to be
considered in the interpretation of any part hereof.
(j) Notices. Except as otherwise specifically
provided in this Agreement, all notices and other
communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered in person or
sent by registered or certified mail, postage prepaid,
addressed as set forth above, or to such other address as
shall be furnished in writing by any party to the others.
(k) Waivers. Except as otherwise specifically
provided in this Agreement, no waiver by either party hereto
of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other
party shall be deemed to be a valid waiver unless such
waiver is in writing or, even if in writing, shall be
deemed to be a waiver of a subsequent breach of such
condition or provision or a waiver of a similar or
dissimilar provision or condition at the same or at any
prior or subsequent time.
(l) Prior Agreements. This Agreement supersedes any
and all prior termination benefits agreements providing for
benefits to the Officer upon an acquisition of control.
5. Term of this Agreement. This Agreement shall remain in
effect until October 1, 2002 or until the expiration of any
extension thereof. The term of this Agreement shall be
automatically extended for one (1) year periods without further
action of the parties as of October 1, 1998 and each succeeding
October 1 thereafter, unless ENERGY shall have served written
notice to the Officer prior to October 1, 1998 or prior to
October 1 of each succeeding year, as the case may be, of its
intention that the Agreement shall terminate at the end of the
five (5) year period that begins with the October 1 following the
date of such written notice.
IN WITNESS WHEREOF, the parties have executed this Amended
and Restated Agreement on this 25th day of July, 1997.
INDIANA ENERGY, INC.
By: /s/ O. N. Xxxxxxx III
O. N. Xxxxxxx III, as
Chairman of the Compensation Committee
Attest:
/s/ Xxxxxx X. Xxxxxxxxx
Secretary or Assistant Secretary
EXECUTIVE
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
